5 ways to improve your family’s finances

Friday, March 02, 2018 - 11:15 AM

With families gathering together soon to celebrate Mother’s Day, now may be a good time to start conversations about how to get the household finances in shape for the rest of 2018 – whether it’s getting the kids into the savings habit, or setting up money goals for plans you’ve got later in the year.

Here are six ideas to help get those family finances sorted…

1. Set up a rainy day fund

The average family cin the UK could only sustain their lifestyle for less than two months – 46 days, to be exact – if they were to suddenly lose their main income, research from Post Office Insurance suggests. It’s wise to have a pot of cash you can easily access if you suddenly have to pay an unexpected bill, such as a new boiler or a household repair, or if you have to cope with a sudden dip in your income. It’s often suggested you should have money set aside that’s enough to cover at least three months’ worth of outgoings, and more if possible.

2. Start savings goals for fun stuff

If you’ve got an emergency fund sorted, you could consider setting up a family savings pot for fun stuff which may otherwise have to go on credit, such as summer holidays, trips out, or even next Christmas. Having a specific goal in mind when you’re putting money away, for example if you’re imagining the fun you’ll be having on the beach this year, could make saving seem less ‘painful’ for everybody.

3. Kick off a savings habit with the kids

If you’re looking to lock money away for your child for the longer term, a Junior Isa could be an option, or you could try a regular savings account. Rachel Springall, a finance expert at Moneyfacts.co.uk, says: “It’s easy to start saving for a child as a Junior Isa can be taken out, completely tax-free, and matures into an adult Isa when the child turns 18. Savers can choose a cash interest option or a stocks and shares.” Springall says cash Junior Isas tend to offer higher rates than other types of children’s savings accounts. Over the longer term, a stocks and shares Junior Isa may outperform the low interest rates on cash savings currently on offer. But savers going for this option need to be prepared for fluctuations.

4. Get on top of household bills

As these will likely take up a big chunk of your income, it’s well worth taking the time to see if you can get a better deal elsewhere – include everything such as energy, food, broadband, childcare and the mortgage.

5. Give your wardrobes a spring clear-out

As shoppers are tempted by the new fashion arrivals of spring, American Express and Nectar have found we typically add 37 items of clothing to our wardrobes every year. And once we’ve found an item, we can be reluctant to discard it – the oldest items in wardrobes being typically just under 12 years old. The average monthly spend on new clothes was found to be £91. So if your wardrobes look ready to burst, have a spring clear-out; there may be items you’ve forgotten about which could save you buying duplicates.